Social media has changed more than the way companies market and promote themselves. Social networking has also changed the way companies recruit, how they communicate internally and how they handle sensitive data.

It almost goes without saying that social media sites such as Facebook, Twitter, Pinterest and LinkedIn are changing the way companies do business. And while social media has probably had the greatest impact on marketing, it is also changing the way companies recruit, communicate with customers and employees, and handle sensitive data.

As you look back at the past year, here are six ways social media has affected companies, as reported by CIOs and other c-level executives.

1. Advertising, Marketing and PR

The area where social media has affected the biggest change is marketing, advertising and public relations. Instead of having to spend tens of thousands of dollars a year on traditional print, television or radio advertising--or even online banner ads--companies can now get their message across for free (at least in theory).

"Social media has revolutionized the way businesses do marketing," says Dave Kerpen, the cofounder and CEO of Likeable Media, a social media and word of mouth marketing agency. "With social platforms such as Twitter and Facebook, companies hyper-target their exact relevant audience," as well as quickly adjust their messaging.

2. Research and Development

Thanks to the rise of social media, it's easier than ever to find people passionate about your company or brand--brand ambassadors. And social media savvy companies have been "leveraging these passionate ambassadors, involving them in product development and design decisions," says Blake Cahill, president, Banyan Branch, a full-service social media agency.

Social media sites allow business "to receive feedback on new products and services prior to honing final product design at very low costs over traditional market research. We've even had clients allow social communities to name products and features," says Cahill. The result: greater word of mouth as well as increased early adoption.

3. Internal/Employee Communications

"Social media facilitates collaboration," says Paul Liu, CIO, Freeborders, a provider of information technology services. "This is especially important for companies with teams that are located across different regions. At Freeborders, we use Yammer [a private social network] to exchange ideas and collaborate with team members from the U.S., China and Europe."

Adds Marcelo Costa, chief marketing officer for Neoris, a global business and IT consulting firm: "Using social media [can be] very useful in managing communication among employees. We have a LinkedIn group exclusively for employees. The group is managed by the employees and they are the ones who create content, share news and comment on industry trends.

Employees are also in the habit of checking into Foursquare when they arrive to work at one of our locations around the globe." In addition, Neoris created its own hashtag and set up a corporate Instagram account so employees can easily share photos and content, which has created a greater sense of community.

4. Customer Service and CRM

Social media has shifted the emphasis away from the traditional call center to tracking customer sentiment online. Indeed, many businesses, as well as companies providing third-party customer service, now refer to what once were known as call centers as contact centers. That's because, thanks to sites like Facebook and Twitter (and blogs and forums and message boards), "customer service has to be acutely aware of current [online] conversations and be able to respond in a timely manner," says Jim Harder, principal, Visual Data Group.

"For the everyday consumer, posting on a company's Facebook wall or leaving them a tweet is the most immediate and convenient point of contact, and it's all public," says Molly Glover Gallatin, vice president of Marketing, Compass Labs, which specializes in knowledge-based marketing and advertising.

"If the feedback is negative, it can affect customer perception of your brand. If it is positive, it can serve as insight into what's working. Either way, companies now need to monitor and respond to what consumers are saying about them--in real-time--across social networks and [include them in their] CRM platform. Do this right," she says, "and you will quickly pinpoint brand advocates and rapidly diffuse any fires."

5. Recruiting Employees

"A site like LinkedIn provides a more efficient way to screen for possible job applicants, as you can see if people have recommendations, endorsements, etc.," says Tracy Petrucci, a social media and online marketing consultant, who also notes that many recruiters also look at candidates' Twitter feeds and Facebook profiles to assess whether the hire will be a good fit.

However, companies need to tread carefully when using social media sites to vet candidate worthiness, says Philip Voluck, a managing partner at Kaufman Dolowich Voluck & Gonzo, who specializes in employment practices liability.

"Companies should be aware that by using social media to vet applicants, hiring managers can find information that is protected by Title VII of the Civil Rights Act of 1964 and the latest tool against discrimination, the Genetic Information Non-Discrimination Act ("GINA"), which prohibits companies from merely acquiring or being in possession of such information," Voluck notes. Moreover, "characteristics protected under Title VII or GINA cannot be the basis of a hiring decision, and hiring managers may need to be able to substantiate the legitimacy of their screening process, particularly when it involves social media."

This introduces new security risks for companies - and new concerns for CIOs. "To combat these risks, companies must put in place strategic policies around social media risk and compliance," and train staff properly, to protect sensitive data.

Jennifer Lonoff Schiff is a contributor to CIO.com and runs a marketing communications firm focused on helping organizations better interact with their customers, employees, and partners.

Jennifer Lonoff Schiff is a business and technology writer and a contributor to CIO.com. She also runs Schiff & Schiff Communications, a marketing firm focused on helping organizations better interact with their customers, employees and partners.